The Future Will Be Fast But Not Free

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The Future Will Be Fast But Not Free

You want broadband. You'll get it. You'll pay for it. You'll like it.

For more than a decade, the Net successfully denied economic reality. It began, of course, as a Defense Department research network in 1969, funded entirely by the government. Even after the first commercial ISPs set up shop in the mid-'90s, the Net ignored the rules of business. Most netizens paid about the same flat rate for a valuable resource, no matter how much of it they consumed. They received the same quality of service, no matter how far from the nearest backbone they happened to live. And wherever they browsed, from Usenet to The New York Times, from the Library of Congress to Napster, they paid virtually nothing for almost anything.

According to traditional capitalist thinking, of course, this made no economic sense. If a product is free, businesses won't want to produce it. If a resource isn't metered, it will be abused. Yet this flat-rate environment survived and even flourished as millions of people flocked online.

Net theory held that these peculiarities weren't peculiar at all. Technophilosophers argued that the combined effects of Moore's law and shared content had fundamentally altered the economic equation. "Bandwidth is going to be virtually free in the next era in the same way that transistors are in this era," George Gilder predicted. Stewart Brand, who first suggested that "information wants to be free," held that online content was already too cheap to meter. And John Perry Barlow suggested that traditional copyright law had become obsolete, thus exempting all digitized text, images, and music from age-old concepts of ownership. "Intellectual property law cannot be patched, retrofitted, or expanded to contain digitized expression," he wrote. "We will need to develop an entirely new set of methods as befits this entirely new set of circumstances."

These notions were supported by technological realities. Digital files could be reproduced ad infinitum, at no additional cost, and then distributed near and far for a fraction of the cost of shipping magazines or CDs. Napster exploded into existence - a thriving realization of both Brand and Barlow's vision. As for Gilder's law that bandwidth would be free, weren't computers getting cheaper - or at least more powerful for the same price? Shouldn't the same thing happen to the hardware that enabled Net access?

As it turns out, there are some good, practical reasons why not.

The most important reason is not the profits-really-do-matter epiphany that shook the dotcom world this past year. Nor is it the recent victories of the recording industry over Napster in the ongoing debate about copyright's future, or the slew of free Web services that soon after went belly up (or stopped being free). No, the immediate reason centers on a simple, straightforward technological fact: A vast fiber-optic network with countless switching nodes doesn't enjoy the same options for cost reduction as transistors. Although the data-carrying capacity of fiber has increased, it still has to be laid and maintained, and there's that old but persistent little snag of bridging the last mile to reach tens of millions of consumers. As for bandwidth, its cost shows no sign of diminishing to zero. On the contrary, higher bandwidth has meant higher monthly fees, and that trend shows every sign of continuing.

In short, it is time for a reality check. The landscape of the Net has changed; that cyberfrontier of the past has become a teeming city of people, transactions, and businesses. And many of the tenets of early Net thinking now seem like a shared hallucination.

Cheap Net access never did have much to do with new technology, anyway. It was enabled by a hidden subsidy: the old copper wires that gave digital data a free ride from your home to the nearest telephone exchange. Everyone bitched about slow connections, but this bottleneck was really a blessing in disguise. By preventing anyone from overloading the system, it allowed low, flat-rate pricing.

All phone jacks were equal - and equally slow - because incumbent local exchange carriers wanted them that way. The ILECs saw no reason to offer upgrades that would undermine their overpriced T1s, and they didn't have to do anything they didn't want to do, because federal law protected them from competition - until the 1996 Telecommunications Act came along. It changed everything.

Suddenly, competitive local exchange carriers acquired the right to offer services like DSL, which had been developed years previously but had never been deployed by the ILECs. This was around the same time that cable TV companies finally realized the Net wasn't just for geeks anymore. Via cable modems and DSL, broadband became a reality.

By the end of 2000, about 5 million US households were equipped to surf at speeds ranging from 200 Kbps (about four times as fast as a 56K modem) to 2 Mbps (40 times faster). By the end of this year, that number will almost double, according to Jupiter Research. Many frustrated DSL customers argue that the rollout should be happening faster, but it is happening.

Everyone knows that the broadband era will breed a new generation of online services, but this is only half of the story. Like any innovation, broadband will inflict major changes on its environment. It will destroy, once and for all, the egalitarian vision of the Internet.

Already, broadband has cracked the illusion that geographical location is irrelevant. In cyberspace as in realspace, location, location, and location are the most crucial factors determining quality of service. If you live in the boondocks or on the wrong side of the tracks, cable modems may not be an option at any price. If you're too far from your nearest central office, DSL may be sluggish or inoperable, because its data speeds are limited by the length of those old copper wires.

"If you're in a top-tier metro area, your chances are much better for having some kind of solution, whether it's a cable modem, DSL, or fixed wireless," says Beth Gage, vice president of consulting for TeleChoice, an independent telecom advisory company. So much for egalitarianism.

As for pricing, here, too, broadband will change the picture radically. Flat-rate billing isn't commercially viable in an era when some users consume 1,000 times as much data as others. If you're downloading a million bits per second, the cost of those bits isn't trivial anymore; and when entertainment companies start peddling video online, pay-per-view, pay-per-byte, and pay-per-hour will be logical consequences.

The biggest change will be in content itself. Net snobs used to preach that the interactive medium would displace the mind-deadening experience of watching TV, but in reality, the TV industry will simply incorporate the features of the Net that appeal to it. Testifying before a House subcommittee in September, AOL Time Warner CEO Gerald M. Levin suggested that Net distribution could "enrich people's experience of television," and predicted video-on-demand.

Of course, TV-like Web-video providers such as pop.com and DEN have failed spectacularly; they could hardly hope to succeed so long as they offered jerky images of atrocious quality in tiny windows.

Everyone knows that the broadband era will breed a new generation of online services, but this is only half of the story. broadband will destroy, once and for all, the old egalitarian vision of the internet.

Today, online video distributed at the formerly unimaginable rate of 1 Mbps can actually look better than a VHS tape, and 1-Mbps connections are proliferating as cable providers and ILECs lay fiber closer to homes. This is the distribution system of the future: Video will become the primary broadband application when consumers realize how good it can look. This explains why AOL - always the most prescient service provider - wanted Time Warner. AOL foresaw the HBO-ification of the Net.

Four steps are now necessary to complete the broadband transition. First, the Net's infrastructure must be re-engineered so that it can support 1 Mbps and higher in millions of simultaneous streams. Second, new billing systems must be installed and adopted. Third, content must be compressed for economic reasons, and copy-protected to reassure its owners. Fourth, heavyweight content providers like record companies and movie studios must make their archives available online.

Upgrading the infrastructure is the biggest challenge, requiring major investment in new technology.

Leaders in this area have not enjoyed an easy ride during the past 12 months, but ultimately they will prevail. Millions of broadband users have already voted with their wallets for high-speed access. Fast information, not free information, will drive and shape the future of the Net.

Step One: Fix The Pipes

The Internet was designed for a few thousand people swapping plain text at 300 bps, not for millions of users sucking down trillions of bits of streaming video. DSL and cable modems have made a dent in the problem. But if everyone attaches a fat pipe to the existing backbone, it could become as overburdened as the California power grid.

Fortunately, Internet infrastructure is upgradable and scalable. Technical improvements to enable streaming video have been engineered during the past few years by edge networks like Akamai, Speedera, Digital Island, and iBeam.

Suppose a college student in Minnesota wants to send a stream from her dorm webcam to her family in Vermont. If she simply dumps video onto the Net through her local ISP, the stream will be broken into packets that may be routed via Chicago, Washington, DC, or New York, depending on how the Net is loaded from moment to moment. Theoretically, when the packets arrive at each destination, a media player will reassemble them in a seamless sequence; but in the real world, we know that it doesn't always work that way. A typical online video image tends to jerk and freeze, and you find yourself looking at that irritating Net Congestion message at the bottom of your RealVideo window.

Now suppose the data is sent via an edge network like Akamai. The Cambridge, Massachusetts-based distribution system leases backbones (from companies like Qwest) to ensure a steady, sequential flow between the ISP where the content originates and the destination ISPs. The Akamai backbones branch and terminate in more than 8,000 edge servers in 55 countries, strategically located as close as possible to the majority of Net users. If you're in a large city or suburb, your ISP most likely receives its streaming video from an edge network, which can remove the worst of the hiccups.

Edge networks have been successful. The big question is whether they can stay that way.

"The only reason broadband works today is that not many people use it," says Steve Lerner, vice president for streaming media technology at Speedera, a company in Santa Clara, California. "Delivering 4 Mbps to every home is beyond the capability of the infrastructure in this country. You will need equipment that will not exist for another 10 years," Lerner explains, citing fiber and advanced routers.

To complicate matters, edge networks were major casualties of the past year's market dive. Akamai stock lost close to 97 percent of its value by mid-March, plunging from more than $300 a share to just over $10. Akamai's competitors fared even worse: Digital Island of San Francisco, which counts AOL, Sun, Cisco, and Microsoft among its partners and operates more than 2,300 servers in 33 countries, saw its stock plummet from more than $100 to less than $3, while its net annual loss increased from $5.3 million in 1997 to $329.9 million.

These numbers tell a classic ebiz story. Entrepreneurs who envisioned a streaming-video future developed new distribution technology in anticipation of the demand. But consumers proved strangely reluctant to peer at tiny flickering images, driving dozens of content providers out of business. Those that survived are scrambling for cash; their advertisers, unmoved by small audiences, are unwilling to pony up much for ineffective banner ads. And since edge networks depend on usage fees from content providers, everyone's in a short-term bind.

In the future, this cash-flow problem should be resolved. High-quality, full-screen Net video will not only enable pay-per-view or pay-per-download movies, it will also introduce us to the pleasures of TV-style Net commercials that will be far more potent than banner ads. Thus, broadband will eventually generate revenue - but the system needs to bootstrap itself to get there. Most of all, distribution costs must be reduced.

According to Akamai, its typical fee for carrying data is a couple of cents per megabyte, which sounds cheap until you consider that each user receives a separate datastream. Jonathan Seelig, Akamai's cofounder and vice president of strategy and corporate development, cites a 90-minute webcast of Steve Jobs in July 2000 as one of the company's biggest projects so far. "We transmitted more than 4.3 Gbps at the peak, to 90,000 unique visitors," he says with some pride. "We delivered more than 6 terabytes. We're the only company that has proved scalability to such massive proportions."

Unfortunately, compared with the reach of magazines and TV, an audience of 90,000 isn't "massive." More important, Akamai's version of online distribution isn't cheap. If Jobs paid Akamai's usual rate, the distribution of his webcast would have put him back at least $100,000, or more than $1 per person. Worse still, any Internet content provider that tries to increase its audience must pay extra for each new viewer. Broadcast television doesn't work this way: Even if the audience for a TV show doubles, the cost of broadcasting remains the same, because one signal, from one source, travels one way, through a free medium (the air) to all users simultaneously.

Edge network advocates like Digital Island's chief marketing officer, Tim Wilson, acknowledge that broadcast TV has an advantage, but they insist that as backbone capacities go up and the price of transmission goes down, Internet distribution will rule, largely because ads can be customized for narrow market segments.

Until then, alternate distribution methods will be more economical. Sunnyvale, California-based iBeam, which carries MTV videos online and boasts alliances with Dell, Microsoft, and RealNetworks, has a unique strategy of uploading its data to a satellite that transmits to edge servers, avoiding terrestrial backbones altogether. DirecPC goes a step further, beaming data directly to more than 100,000 subscribers in the US via satellite instead of piping it through the Net. However, DirecPC's rated speed of 400 Kbps is good only during off-peak hours when few users share the limited resource. Moreover, the signal is one-way; you need a dialup phone connection to carry your mouse clicks or email back to the system.

__All broadband systems need upgrades before they can fulfill their promise on a mass scale, and this will require steady revenues. The good news is that the tools to monetize the datastream are here. __

While DirecPC promises that a two-way satellite link is on the way, StarBand has this up and running already. Launched in April 2000, StarBand charges $69.99 a month for Net access (and $99.99 for the premium service, with 150 TV channels courtesy of the Dish Network). StarBand-ready Compaqs are sold at RadioShack, or you can buy a special satellite modem that plugs into the USB port of your PC. Downloads are said to be as fast as 500 Kbps, while the uplink runs at 150 Kbps - although these rates may drop by more than 60 percent during busy times.

Satellite Internet systems have a better chance of being profitable in the short term because their distribution costs aren't as closely tied to the number of users; plus, they're a boon to anyone who lives beyond the reach of other broadband sources. Their disadvantage is that they're too slow for high-quality video. Eventually they'll have to be upgraded, just like edge networks.

The bottom line: All broadband distribution systems need upgrades before they can fulfill their promise on a mass scale, and this will require steady revenues. The good news for struggling broadband startups is that the tools to monitor the transactions of this online economy are already here.

Step Two: Streaming Revenues

In December, Akamai announced MediaPlus, a software suite designed to turn bits into money. "It can help to create a pay-per-view environment," explains Seelig. "Or it can insert advertising into the datastream, customized on a geographic basis. And it enables a content provider to monetize the stream by syndicating it to other sites." Akamai is ready for the day when video looks so good online, advertisers and viewers will happily pay for it.

Geneva Technology, a 4-year-old British company that launched in the US in mid-2000, offers a similar service that runs on any wholesale-distribution system, from edge networks to large ISPs. Idar Voldnes, Geneva's president, explains that his software can process any event, such as a phone call or even a mouse click, and arrange for someone to be billed for it. "The first place we'll see this is in the mobile world," he says. "Mobile commerce will never be entirely free."

He sees the same thing happening on the desktop: "Free services will last to some extent, but businesses can't survive without revenue, and you'll have to start paying for content."

Speedera's Steve Lerner sees the shift away from free Net services as being not just necessary, but desirable. "It's like, if everybody turns on their air conditioners, the whole power grid goes down," he says. "You have to have a penalty for using too much." Still, the payment process needn't be painful. "When you toast a bagel, it costs money, but not enough for you to think about. That's the model the Internet has to evolve to."

A few old-guard Net idealists still insist that no one wants to pay for online content, at any price, because information wants to be free. Reacting to this, many writers, musicians, and other artists complain that they can't make money selling content online. But the artists ignore one simple fact: X-rated content isn't free but is perennially popular on the Web - amounting to a $1.5 billion industry. If people want something enough and the cost is tolerable, they will pay.

It's a matter of finding the price point. Music might not be as desirable as Web porn diva Danni Ashe, but it must have some value. Suppose there was a site storing a million digitized CDs, allowing up to 50 downloads for $20 a month. Wouldn't most people opt for this convenience, rather than endure the inconsistent quality and hassles of a Napster-style peer-to-peer music-sharing network?

The state of the Net today recalls the state of television in the 1970s, when cable companies started persuading consumers to pay for TV, even though it had always been free. Dish owners rebelled and indulged in massive video piracy because they were overcharged; but the piracy problem disappeared as prices dropped to a tolerable level. Today, almost everyone accepts that cable and satellite services are worth paying for, since they offer a wider range of higher-quality programming.

Many businesses are betting that a similar evolution can occur online. Leading the move is a startup named iBlast, which will use existing TV stations to circumvent the costs of broadband distribution. Through a quirk in federal law, broadcasters all over America have been given free digital spectrum. Originally, they were supposed to use this for HDTV, but with amazing generosity, the FCC didn't force them to do this. Instead, broadcasters can use their extra spectrum to send a digital version of the low-quality picture format that was established as a standard back in 1953. With data compression, this picture can be squeezed into less than half a channel, leaving the rest of the new, free spectrum unused.

Broadcasters seemed unsure of how to use this surprising gift from the federal government. Then a couple of enterprising opportunists named Michael Lambert and Oliver Luckett came up with a shrewd idea. Lambert had participated in creating the Fox network, where he served as president of domestic television. Luckett had been a chief IP services architect at Qwest, the fiber-optic communications giant. Together they proposed a new nationwide TV network that would send movies, games, cartoons, and other content to broadcasters, who would then transmit these programs using their spare spectrum. Already, iBlast has partnerships with media heavyweights like Cox, Gannett, Tribune Broadcasting, the Washington Post, and the New York Times.

Because the transmissions will be digital, new receiving equipment is necessary - but you'll need it anyway as all TV broadcasts go digital over the next decade. In the beginning, the service will be pay-per-view, with 10 to 15 movies available each day. The iBlasters also talk about distributing videogames and software. You'll buy a decoder key through the company's Web site or toll-free number. After you download the content, your key will unlock it for a limited time. "We think most content providers won't want the consumer to accumulate libraries," says Luckett. "They'll make 20 movies available during a week, then pull them out and move them elsewhere, and give you 20 different movies next week."

iBlast has run test broadcasts in Los Angeles, San Diego, San Jose, Orlando, and Phoenix. Counting the 246 broadcasters that have signed up so far, iBlast will be able to reach 93 percent of US households. This gives it an immense advantage over Internet distribution - in the short term.

__As terrestrial networks struggle to compete with satellite systems and local broadcasters, two factors can tip the balance in their favor: compression and copy protection. Get ready for the 500-meg feature film. __

Step Three: Compress and Control

As terrestrial networks struggle to compete with satellite systems and local broadcasters, two factors can tip the balance in their favor: compression and copy protection.

Almost all digital video is compressed before distribution. If you look closely at a picture, every few seconds you may notice the background dithering fractionally from side to side. Similarly, mouth and eye movements of talking heads may have an unnatural, incremental quality. These blemishes are introduced by MPEG-2, the world's most widely used system for squishing data. Its compression ratio ranges from the high-end 8:1, to the common 20:1, all the way to 100:1, although the flaws at that scale make the picture commercially unusable.

Now this technology standard is being challenged by Microsoft, which boasts that the compression scheme in its Media Player 8 packs down video even smaller while creating fewer artifacts. According to Dave Fester, general manager of Microsoft's digital media division, "At 750 Kbps, when we demonstrated Media Player side by side with a DVD picture, half the audience was fooled." Presumably, the other half wasn't fooled. Still, if Media Player can convince even one person that its 750-Kbps stream is comparable to a DVD, this is a major achievement. According to Fester, it means that a watchable-quality two-hour movie can fit into 500 Mbytes.

Rob Glaser, CEO of RealNetworks, claims that Microsoft is merely playing catch-up to RealPlayer 8, but it doesn't matter who's right. If a movie can be crammed into 500 megs, you can download it in about an hour via a 1-Mbps cable modem, burn it onto a CD-ROM, and share it with friends. Some people are doing this kind of thing already, using cruder video images that are illegally circulated online.

Such behavior triggers apoplectic outbursts from Hollywood's copyright-infringement junkyard dog, Jack Valenti. However, Mr. MPAA and his pack of litigators may be placated by Media Player, because it not only offers better compression, but also includes a powerful copy-protection system to assuage the anxieties of even the most paranoid movie mogul.

According to Microsoft's Fester, a movie streamed in Media Player format contains hidden codes restricting the number of times or days you will be able to view it. And you can watch it only on the computer at which you ordered the movie. If you make a copy for a friend, she'll have to pay to unlock it on her computer.

If this scheme convinces Hollywood that the Net can be a safe, lucrative environment, broadband will reach its singularity: a point where its quality ceases to be a joke and becomes a cash cow. Already, dozens of startups are positioning themselves for this bonanza.

Step Four: The Million-Movie Universe

No broadband content-distribution company has done its homework more thoroughly than Intertainer, a Culver City, California, startup that has partnerships with Warner Bros., New Line, 20th Century Fox, DreamWorks SKG, Vivendi Universal, Sony Music, ESPN, PBS, and the Discovery Channel. Founded in 1996 and privately held, Intertainer raised seed money from Comcast, Intel, Microsoft, NBC, Sony, and Qwest, among others. Who could ask for more?

Intertainer's high-end videos are streamed at 750 Kbps. Cincinnati Bell and Verizon offer this level of access to some consumers, while Qwest claims it's ready to provide a similar service in six cities. Intertainer CEO Jonathan Taplin says the company streams more than 500 hours of Hollywood hits, classics, TV shows, music videos, and concerts every week. You pay $3.99 to rent a relatively new release (and less for other movies), and can watch it as often as you like over a 24-hour period.

The vexing issue is whether the Hollywood players will cooperate sufficiently to attract consumers. Studios have refused to license any title to Intertainer until 40 days after it has been distributed to rental stores. "That's going to change," Taplin claims. Still, at this point you'll see a movie on an airplane before you'll find it online.

Warner reportedly is digitizing its film archives, and has negotiated with Sony for a joint video-on-demand service to be delivered over the AOL Time Warner network. Sony plans to have a new video-on-demand project dubbed MovieFly running by May - yet such online initiatives have been notoriously unfruitful. Warner Bros.' Entertaindom, launched in 1999, never received much corporate backing and was virtually abandoned a year later.

Blockbuster Video is the most recent example of a company that has failed to follow through on promises of large-scale online distribution. The company signed a distribution agreement with Enron, which has built a nationwide fiber network running servers from nCube, the Foster City, California, broadband infrastructure company. nCube's senior VP of product management, Dan Sheeran, insisted in December 2000 that the Blockbuster service would offer video-on-demand for about what you'd pay at Blockbuster's 5,000 stores. David Cox, a managing director of Enron broadband systems, was equally adamant that the Blockbuster system would work, adding, "There are other content providers we are actively courting."

But by March, Blockbuster had announced a deal with only two studios and was testing the service in just three fairly obscure markets. Courtship is futile without consummation, and Blockbuster's tentative tests in Portland, Seattle, and American Fork, Utah, fall far short of wholehearted commitment. Also, while the company has pledged to offer Universal Studios movies, it avoids mentioning how new these movies might be. At press time, there was no indication that any first-run titles, from any movie studio, will be distributed online by Blockbuster or any other service provider - and the nCube alliance had fallen apart.

So far, the most clever strategy to induce studio participation comes from SightSound Technologies, a digital movie distribution company in Mount Lebanon, Pennsylvania. SightSound claims to have rented out the first online movie, in 1999, and has always refused to use streaming video. "We have a download model, not a streaming model," says CEO Scott Sander, suggesting that many people will be happier with this, since they can use a relatively slow connection to download a movie overnight. "And, we encourage file sharing."

__Digitized movies will rescue edge networks from their cash bind and speed the deployment of true high-speed Net access across the nation. And that is just the beginning of the new broadband era. __

If this sounds heretical, Sander is counting on Microsoft Media Player's copy protection. When you download one of his movies for $3.95, and then make a copy for a friend, your friend must pay to unlock it - at which point SightSound gets a second $3.95 payment without having to send a second copy of the movie. In effect, he's hoping that the friends network will do his distribution for him. Also, since SightSound doesn't stream its signal, it doesn't need an impeccable connection, which eliminates the expense of an edge network. "We're basically providing an upgrade to piracy," says Sander. "Instead of trading a shaky handheld video made with a camcorder in the theater, people can trade the real thing. It looks better, and it's legal." It also costs $3.95; but for the higher quality, this may be tolerable.

Of course, if someone hacks Microsoft's encryption system, the game's over. Sander says he's not worried, because "Microsoft not only owns the source code, but the operating system, and is well able to hide the key."

Maybe so. But last year, rogue hackers circulated a compression scheme that had allegedly been "liberated" from a previous release of Microsoft Media Player. Named DivX in a satirical reference to a defunct DVD rental system, the algorithm is being used for bootleg videos online. Its originators have pledged to spread the source code among more developers than even the MPAA can sue.

Historically, copy protection has never been as secure - or as necessary - as its advocates imagine. In the 1980s, a lot of software was distributed on disks that were supposed to be copy-protected but were easily duped using bit-nibbler utilities. Eventually, software publishers were forced to abandon copy protection, although some of them predicted that their capitulation would drive them out of business. More than a decade later, their fears appear to have been groundless. Microsoft, for instance, still manages to turn a profit.

Movie studios issued equally dire warnings in 1977 when they sought an injunction to ban the Sony Betamax, fearing that videotape would bankrupt Hollywood. Today, Hollywood does quite well renting and selling recorded tapes.

The lesson should be obvious by now, but apparently it must be relearned with each new digital medium. Copy protection does help to entice content owners to offer their wares, but if the wares are overpriced, the system will be hacked. Conversely, if the product is cheap enough, protection becomes unnecessary, because most users will pay.

From this perspective, distribution over the Net needn't be a catastrophe. It could be a huge source of new revenue - provided that a wide variety of content is available.

Online, people expect more inventory, not less. If content owners try to restrict access, they'll fail to excite much interest. This is precisely what happened in disastrous test runs of video-on-demand. Compare that discredited model with the ultimate broadband scenario: Using your 45-Mbps always-on VDSL connection, you surf to your favorite movie store, where a server farm keeps a copy of almost every movie ever made, in every language and every format, including wide-screen HDTV (1,920 x 1,080 pixels). While browsing through clips, searching for an obscure 1980s Hong Kong action movie, you stumble upon a Japanese samurai film you've never heard of. Naturally, you buy them both. For $2.95 apiece, why not? In fact, the price is so low, you won't even bother to burn the movies onto DVDs. If you want to watch them again, you'll just pay for another download. As the data flows in, you have time for some video-enhanced chat via the same VDSL connection. After half an hour, when the movies have been saved onto your hard drive, your media player starts squirting bytes through your PC's $50 transmitter card, which sends its signal to the HDTV receiver in your living room. Or, you can choose to watch the movie on your 23-inch PC monitor, in sync with a friend in Hawaii. He'll maintain a text link in a separate window, swapping comments about the movie with you while it's playing.

This vision may sound as idealistic and naive as the old egalitarian model of the Net. There's a crucial difference, however: It embraces economic reality, instead of trying to deny it. In reality, cable and satellite TV services have already proved that millions of people will pay a reasonable price for a wide variety of quality programming. The same can be true with broadband, where data storage and the number of potential channels are nearly unlimited.

Movies are the most desirable, most easily digitized form of entertainment for broadband distribution. Rental or purchase fees will rescue edge networks from their cash bind and hasten the deployment of true high-speed access across the nation. But this will be just the beginning of a new era. High-speed datastreams will enable new applications that even old-style netizens could love, venturing far beyond the movie-download model.

Ten years from now, when every PalmPilot can display video, a webcam is built into every monitor, and full-screen clips are commonly sent as email attachments, the broadband metamorphosis will be complete. At that time, the egalitarian Net will be a distant memory - but no one will care. Users won't reminisce about the equalizing effect of 28.8 modems any more than car drivers yearn for a time when everyone had to drive equally slowly, because dirt roads hadn't been paved with asphalt.

The free ride online is over; but the ride ahead will more than compensate for anything we've lost.